I'm managing a trust and preparing to buy a piece of property with it. The trust itself is worth about $5M, but has very little income (about $50K/yr).
I need to take out a mortgage for $190K as part of a 1031 exchange. It's a little early into the process for me to seek out financing, but I'm curious if anyone here has done something similar. I'm not sure traditional lenders would be willing to write a loan for this type of situation and I'm wondering if there's a different lender I should start with instead.
Ultimately I plan to pay off this mortgage quickly with cash (or a margin loan from the trust's brokerage account), so I'm not as concerned with the interest rate. I had originally planned to buy a property worth about $500K, but now that I'm realizing I need to take out the mortgage to qualify for a 1031, I may have to bump that up to $650K if the lenders are only willing to lend up to 30% LTV.
Anyone here that has sought financing for a trust or a high-value/low-income individual?
How difficult is it to seek financing within a trust?
byu/Harry_Coolahan inrealestateinvesting
Posted by Harry_Coolahan
1 Comment
You might want to look into portfolio lenders or private lenders since traditional banks get weird about trusts – they’ll probably want to see the trust docs and get all nitpicky about the income requirements even though you’re planning to pay it off quick anyway